RBI (Reserve Bank of India) has made it mandatory for PAYPAL not to make any pay outs in India without a PAN card to counter any money laundering and tax avoidance.
Hence it is required that you get the PAN Card (you need address proof and photo ID). It is very easy to get a PAN Card. Check out the websites for PAN Card processing center near your place. In Bangalore it is available behind ULSOOR POLICE STATION. In two weeks, you will receive the card at your address.
For PayPal, you need to provide:
1. Email Address
2. Pan Card
3. Your physical address
4. Link your PayPall account with your Bank Account in India.
This way, any payments received at Paypal will automatically transferred to your bank account.